3 Winners and Losers From Brazil’s Latest Corruption Revelations

After months of anticipation, Brazil’s Supreme Court released on Tuesday the names of dozens of politicians who will be investigated as part of the ongoing probe into corruption at state oil company Petrobras. The list is a veritable who’s-who of Brazilian politics, and includes nearly a third of President Michel Temer’s Cabinet and a third of the Senate. The release, based on plea bargain testimony from executives at conglomerate Odebrecht, had long been euphemistically known as “the end of the world” in Brasília because of its expected breadth and specific, damning details – and it did not disappoint.

Legal experts were still poring over the documents on Wednesday, and cautioned against assuming everyone named will end up in prison. For example, nearly half of the charges involve illegal campaign finance, which under Brazilian law has a statute of limitations and is considered less serious an infraction than money laundering or graft. “It’s practically impossible for someone to go to jail for that kind of crime,” criminal lawyer Celso Vilardi told O Estado de S.Paulo. Others will be shielded by the so-called “special standing” provision that allows cabinet ministers, legislators and others to be judged by the Supreme Court - which in practice means that their trials don’t start for years, if ever.

That said, the disclosures leave behind clear winners and losers, especially in terms of political fallout in a nation weary from two years of scandal and recession. A partial list follows:

WINNERS

1. Luiz Inácio Lula da Silva Brazil’s president from 2003 to 2010 appears in the Odebrecht testimony, and he is also facing separate corruption-related charges. But the sheer volume of other politicians named on Tuesday, including Lula’s predecessor and longtime rival Fernando Henrique Cardoso (1995-2002), will make Lula’s alleged crimes seem less extraordinary in comparison. It reinforces an already prevalent view among many Brazilians, especially the poor, that “All politicians are corrupt, but Lula’s the only one who ever did anything for me.”

Is that cynical? Sure. But recent polls have shown Lula remains Brazil’s most popular politician, and he would beat all other presumed candidates in the 2018 presidential election, including in runoff scenarios. This merits several caveats - most voters aren’t paying attention yet, and Lula could still be disqualified from running if a judge convicts him and that ruling is then upheld by an appeals court. But Brazil has been waiting for Lula’s supposedly imminent imprisonment for more than a year now, to no avail. It seems increasingly possible that The Bearded One will at least make the runoff in 2018.

2. João DoriaThe new mayor of São Paulo is one of just a handful of prominent politicians whose names don’t appear on the Odebrecht list. The fact he’s great at social media and new to politics - a businessman and onetime host of Brazil’s version of The Apprentice - has endeared him to the working class and drawn inevitable comparisons to You-Know-Who. New allegations against other politicians from Doria’s PSDB party, namely São Paulo governor Geraldo Alckmin, make Doria look like the party’s only viable name for president in 2018 - and despite his vulnerabilities, arguably the best hope overall for the anti-Lula crowd. The longer it takes Alckmin and parts of the PSDB establishment to realize this, the harder Doria’s battle will be.

3. Brazilian retirees and labor unionsMomentum had already flagged in recent weeks for President Michel Temer’s plan to raise the retirement age to 65, which he hopes will narrow Brazil’s fiscal deficit and, in turn, regain investor confidence. Now, Temer’s main advocates for pushing the reform through Congress – including his chief of staff, Eliseu Padilha – have appeared in the Odebrecht testimony. Some political analysts argue these allegations had long been expected, and won’t change much. But that may be too insider-y a view; most Brazilians don’t read newspapers, and based on the white-hot anger that erupted on Facebook and Twitter Tuesday night, the news hadn’t become real until they actually saw the list and the specific allegations. That suggests Congress may be tempted to focus more attention on its own survival in 2018 than taking away so-called “rights” from voters. A watered-down pension reform still seems likely, but other initiatives - including labor reform - may now be off the table.

LOSERS

1. The entire political establishmentThe same generation of politicians has run Brazil, for the most part, since the dictatorship ended in 1985; many are now in their 70s or 80s. It’s hard to escape the perception they’re all now on their way out the door, with the possible exception of Lula, per the above. Generational renewal is a good thing, and could lead to the clean, modern government Brazilians say they yearn for. But the danger is that Brazilians, fed up with not only corruption but also rising crime and the worst recession in history, turn against democracy entirely - and are seduced by the “soft authoritarianism” currently sweeping much of the world. A poll by Latinobarómetro in 2016 suggests the risk is real: it showed that only 32 percent of Brazilians agreed that “Democracy is preferable to any other form of government” - a 22-point plunge from a year before, and the second-lowest level in Latin America, behind only Guatemala.

2. Michel TemerAfter Temer took power in 2016, following Dilma Rousseff’s impeachment, he made a risky bet: that by appointing a Cabinet of veteran politicians, he would be able to push reforms through Congress and get Brazil’s economy growing again. Even though many ministers were under a cloud of suspicion, and everyone knew the “Car Wash” case would eventually dig up more dirt, Temer wagered that a brisk economic recovery would quickly overcome public anger over corruption. Well, nearly a year later, Temer has an approval rating of just 10 percent, the economy is still stagnant, five ministers have quit because of corruption allegations, and a third of the remaining cabinet was named in the Odebrecht testimony on Tuesday. Temer’s aides still say he could go into history as a success, pointing to forecasts of 3 percent economic growth in 2018. But the window is closing fast.

3. Brazil’s 12 million unemployedThe damage to Temer’s reform agenda is a tragedy, because it includes many measures that would help improve the business climate and spur job creation. It seems like it’s the poor who always end up on the losing end of politics in Brazil; this case, sadly, will be no different.

ABOUT THE AUTHOR

Brian Winter is editor-in-chief of Americas Quarterly magazine and the vice president for policy at Americas Society/Council of the Americas. A best-selling author and columnist, Brian is a leading expert on Latin America and a frequent speaker for international media and events.